🧊 Cooling Momentum? Bitcoin Faces Shaky Ground as Analysts Caution

Bitcoin (BTC) has fallen 3.7% in the previous week as trade behavior suggests a sell-off or profit-taking phase.

The main cryptocurrency has traded between $113,000 and $114,000 today after hitting over $123,000 last month. BTC is now worth $114,420, indicating market instability.

Market observers blame deteriorating liquidity and uneven institutional demand for the price decline. Arab Chain, a CryptoQuant QuickTake contributor, has identified various on-chain phenomena that have hindered Bitcoin's price stability despite lower supply.

Limited Liquidity and Market Fragility

Arab Chain found that the liquidity inventory ratio plummeted in mid-July to just over three months of supply on key trading platforms.

This indicator measures Bitcoin availability compared to market activity. Reduced supply usually raises prices. Arab Chain indicates that inadequate fresh demand left the market weak, causing the opposite impact.

Arab Chain said that even tiny sell orders may cause huge price declines when liquidity is low and major investors or ETFs are not purchasing. In “thin market” situations, inadequate order book depth increases volatility and makes prices more sensitive to rapid negative swings.

Market instability may endure without new demand, according to the report. Bitcoin's price has corrected for lengthy durations due to limited liquidity and a lack of significant purchasers.

ETF Demand Volatility, Weak Accumulation
The fluctuating demand for Bitcoin-linked ETFs has also contributed to the recent slump. Arab Chain had dramatic ETF influx spikes and withdrawals, leaving prices unsupported by institutional support.

On-chain data also indicated that “smart portfolios,” or high-value addresses used for strategic accumulation, bought nothing during the slump.

Accumulation implies long-term optimism, but its modest pace couldn't offset selling pressure. Insufficient quick demand reduced market support.

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